I am the CEO of patient relationship management company Avado (acquired by WebMD October 2013), the first cloud-based EHR-agnostic patient portal. I was named one of the 10 most influential people in healthIT and a "healthcare transformer" by the StartUp Health Academy. I have been invited to the White House and presented before the head of Medicare and the Pioneer ACOs. I'm also a co-editor and writer of a book commissioned by HIMSS on patient engagement. Previously, I was a senior consultant in Accenture's healthcare practice and a founder of Microsoft's $2 billion health platform business. I left Microsoft in 2003 to work in startups as an executive to multiple high growth companies. Avado has been featured in the New York Times, Wall Street Journal, TechCrunch, Washington Post, Bloomberg and numerous healthcare industry publications. It partners with EHR vendors to provide a competitive advantage over silo'ed patient portals and was selected by 22 pioneering healthcare providers in New York state for a statewide program pioneering accountable models.

Nimble Medicine Set to Reshape Healthcare

In the New Yorker magazine, Dr. Atul Gawande outlined how, at the turn of the 20th century, more than forty per cent of household income went to paying for food and food production consumed roughly half the workforce. It began in Texas with a wide array of new methods of food production were tested. Fast forward to today and food now accounts for 8% of household budgets and 2% of the workforce. As a wide array of small innovations ultimately led to the transformation of farming, so too is a rapidly building wave of innovative new care and payment models leading to similar breakthroughs in healthcare. I call this Nimble Medicine.

Traditionally, attempting a new care or payment model meant long planning and development cycles. The cost and complexity of testing new models prevented many from being tried. Even today, the leading HealthIT vendor is known to charge $100 million and up for its software and it takes a long time to implement. [See also Health Systems Spending Billions to Prepare for the Last Battle] This is a vestige of the “do more, bill more” model of reimbursement particularly given that healthcare is a supply-driven market (e.g., MDs who own a stake in imaging equipment order scans at three times the rate of MDs who don’t). Spending nine figures doesn’t sound so bad when you have capital projects planned in excess of $1 Billion. Perhaps we should refer to the legacy model as the “build more, do more, bill more” model. Any health analyst will tell you that the cure for healthcare’s hyperinflation is NOT building more healthcare facilities. It would be as if a fire department argued that the way to solve a wave of structural fires was to buy more fire fighting equipment. Indeed, that might help, however there’s a much more cost-effective approach such as having buildings inspected for fire prevention capabilities.

In their book, The Innovator’s Prescription, Clayton Christensen and Dr. Jason Hwang point out how applying technology into old business models has only raised costs.

Images are courtesy of Jason Hwang, M.D., M.B.A. Executive Director, Healthcare of the Innosight Institute and co-author of The Innovator’s Prescription.

In contrast, disruptive innovators such as WhiteGlove Health and Qliance rethought the care delivery and payment models from the ground up. Their results have been impressive. For example, Qliance has Net Promoter Scores higher than GoogleGoogle or AppleApple, while reducing the direct costs of healthcare (i.e., their service coupled with a high deductible wrap-around policy) 20-40%. More impressively, they have reduced the most expensive downstream costs (surgical, specialist and emergency visits) 40-80%. Likewise, WhiteGlove Health already has 500,000 members and has more 5-star reviews on CitySearch than any other organization in the country.

The next wave of disruptive innovators are taking advantage of second-mover advantage as the wave of healthtech startups provide them off-the-shelf software that is an order of magnitude less investment than the first wave of innovators. It’s a couple orders of magnitude less expensive than legacy HealthIT. More importantly for the innovators is the speed that they can not only stand up the new technology but also easily iterate based on real world experience. Rather than months or years, it’s hours or days. This is a key component of Nimble Medicine. They also make the most of investment others make rather than be threatened by them. For instance, WebMD is used by over 100M consumers per month. Clinicians can curate information that they think will be useful for patients from WebMD and others who’ve made large investments in consumer-friendly content. [See Doctors' Success Hinges on Transactor to Teacher Transition for more.]

Consider the following scenarios: [Disclosure, my company, provides some of the technology components underlying these models which is why I have visibility into their strategy.]

MedLion has created a fast-growing Direct Primary Care model with minimal capital investment. They are rapidly opening/converting practices. This has been accomplished with a mix of a creative business model and enabling technology that is well under 5% of the cost of what their competition has spent.

A company that is providing emergency physicians to hospitals has found that many individuals are using the emergency department as their primary care facility. This is because these individuals aren’t able to access a regular primary care provider. Unfortunately, many of them are unable to pay the high fees common in an ER. Rather than simply sending them to collections, they are setting up an affordable alternative outside of the ER for non-emergent care. The technology setup takes less than a week to enable this new line of business. They’ve taken a lesson from wireless carriers who realize that more affordable packages can address a market need yet still be profitable.

Sites such as 2nd.md have created virtual second opinion or e-consult marketplaces. Rather than flying from Alaska to San Francisco to get a critical second opinion or consultation, the individual and their family can save time and money through a virtual encounter. In response, some physicians are realizing that they can set something up directly without having to pay a 3rd party intermediary. Their technology need is essentially a light-weight (and low cost) system that allows intake of patient information (medical history, lab results, etc.), a virtual visit (e.g., using software from a company like Revation) and then follow-up documentation. The entire technology implementation doesn’t take more than a couple of days. This has been applied in disciplines ranging from oncology to orthopedics to pediatrics and more.

For those of us in the technology industry, there’s striking parallels with what has happened in technology where centralization was followed by decentralization. For healthcare providers, lessons can be drawn regarding how some organizations were able to make the transition from one generation to the next while many others faded from the landscape. The graphic below depicts the transition from the slide rule to the mainframe and then back out to mobile devices.

In an earlier piece (Healthcare Field of Dreams In Idaho: Health System Opens Innovation Center), I highlighted an innovation group that is building the next “hospital” – a hospital without walls. Unlike a massive capital project necessary to build a traditional hospital, I expect that new “wings” of the virtual hospital will get built via a series of smaller projects. They have hired entrepreneurial people to bring the agility necessary in this new approach. This is a great example of Nimble Medicine.

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What about plugging OLD technologies into healthcare? Electronic records, complex event processing, BPM, social media and many other technologies have been in place for years and are accepted as critical to doing business.

The problems of healthcare are unlikely to be solved by the usual healthcare IT suspects who for years have been able to throw technology out without solving the more fundamental problems that were overcome elsewhere long ago:

Thank you Dr Atul for your eye-opener. The info is even more relevant in Below Poverty Line countries like India where unfortunately the institution and high tech based approach is pursued more just for its ‘rewards’ rather than addressing medical care to the much larger deprived general esp. village populace. Dr Vishnu Acharya

Outstanding post. There is so much innovation in healthtech now – exciting time.

How do you see patient relationship management, which is a relabel of CRM, which is the epitome of do more, bill more old style enterprise software, fitting into the thesis that new technologies don’t fit into old business models?

This approach seems problematic for healthcare IT – trying to copy old-style IT models like centralized messages hubs for HIEs and CRM for doctors and patients when there is so much agile (and more secure) technology available today.

With health care systems that are going to reaching out to all of their patients they are going to need an extensive CRM and PRM. I have found that there are some PRMs and healthcare CRMs that are out there now. The CRMs that are available now are not all headed in the right direction according to your diagram. What companies or CRMs that are out there currently are ones that you recommend? http://www.marketware.com